Wading into the spin-offs from weed

Don’t be fooled by Chelsea’s newest business – just because the soon-to-be hanging sign outside reads ‘Northbud’ doesn’t mean you can stop by to fill up your medical marijuana prescription, or, come July 1, bring home some weed for your dinner party guests.

Northbud Capital Holdings is a cannabis investment company and the latest venture of Chelsea resident Ryan Brown. The former Hills realtor and Wakefield native has partnered with Chelsea resident Pete Souchen to form the company specializing in investing in small cannabis start-ups mainly in the U.S. With an office just opposite the Bistro Manchester on Hwy 105, the co-founder behind medical marijuana firm Tetra Bio-Pharma – created in 2014 and currently valued at about $100 million – has collected close to $4 million from investors.

“There is literally thousands of small and mid-sized companies operating in the cannabis space mostly in the US, guys that need some capital to expand,” said Brown. Although marijuana is legal for recreational use in seven U.S. states and for medical use in over 20, the drug is still federally illegal, meaning banks won’t touch cannabis-related industries.

Brown points to a cannabis delivery company in Nevada, a completely legal and legitimate business following all state regulations – of which there are many – and doing millions of dollars in business. “Just because they aren’t able to open a bank account doesn’t mean they aren’t compliant.” Another company has developed technology that can remove the chlorophyll from dry plants for use in the edible cannabis market. It’s firms like these that Northbud will invest in. Brown said being Canadian-based and publicly traded (Northbud plans to go public this fall) breaks down barriers giving cannabis entrepreneurs access to finance.

“We invest in a company at a seed level evaluation, we help them build up and then we either spin them off into their own public company or sell them off to another company.”

Brown equates the climate of the cannabis industry to that of the high tech industry of the early nineties, best described as a posse of computer geeks living in their parents’ basements developing programs bought by the likes of IBM for millions of dollars.

Brown is also seeing the infrastructure around the world of cannabis as the most lucrative sector of the industry to invest in. From information technology systems and hydroponic lights, to child-safe packaging and delivery companies, the businesses that support the cannabis industry are where the money is. Brown equates it in some ways to the gold rush: it was the banks and shipping companies that made it rich after the dust had settled following the gold rush, not the guys mining the gold.

The suits and ties are “aggressively coming” for the “hoodies and ball caps” that currently run the cannabis industry, said Brown. He points to a “very, very narrow window of opportunity like there was in the high tech boom,” to make generational wealth.

Got a spare $1,000 lying around and thinking of investing it? It’s not quite so simple. As Northbud isn’t an Autorité des marchés financiers accredited investment company, Brown can’t take your $1,000 cheque as much as he may want to. But not to worry – if Northbud’s plans to go public come to fruition, anyone with a few dollars to spare will be able to invest.